E-commerce Payment Authorization

E-commerce Payment Authorization Failures Hugely Impacting the Online Retail Industry

Don’t we all despise seeing a message that says, “Payment failed, simply try again”? The stress of going through the entire online payment method including e-commerce payment authorization exhausts us.

When this happens more than once, many customers abandon their purchases and go to the next web shop.

As digital payments become a common platform for collecting payments, a merchant that takes e-commerce payment methods or operates an eCommerce shop should not neglect this issue, as it might cost cart abandonment and cause you to lose a client and income.

E-commerce companies lose clients for various reasons, but one of the most serious is one that few people are aware of: e-commerce payment system authorization problems. Approximately one out of every seven eCommerce dollars is refused during payment authorization. According to a statistic, up to 72% of these orders are placed by legal consumers who can afford to purchase. These decreases alienate excellent consumers and leave $600 billion in worldwide revenue on the table each year.

So, What Precisely Causes Online Payments to Fail?

To understand why payments fail, let’s first look at how available payment methods for e-commerce are conducted.

Payment Failure Types

Payment failures can be broadly categorized into several categories, depending on the type.

Here are Some Examples of Classes:

  1. Payment failure occurs when the money is charged, and payment failure occurs when the money is not charged.
  1. Payment failure on the customer’s end and payment failure on the merchant’s end

What are the Possible Causes of Payment Failure in E-commerce Payment Authorization?

When you initiate a payment system in e-commerce, numerous elements go into making the payment feasible, and a single hiccup in any of these organizations might result in an online transaction failing.

This, of course, can be rather annoying, given the level of trust that goes into entering your bank credentials online to begin a transaction. Consumers and companies frequently think that the payment gateway is at fault, leading to them using different payment gateways to complete their transactions.

A bad connection might cause online e-commerce payment system failure on the customer’s end, wrong typing information, inputting incorrect OTP, passwords, or a lack of adequate cash in the customer’s account.

From the merchant’s perspective, things get more complex, and it is critical for each merchant to realize why online payments happen.

Failure of Technology

Payment processing consists of many phases in which consumers’ payments are deducted from their accounts and credited to the merchant’s accounts.

When consumers begin payment, they must select a payment method, such as net banking, credit card, and so on. Customers provide needed data such as username, password, CVV, and so on after selecting an online payment option.

This information is subsequently sent to the payment gateway, which forwards it to the card network. After all payment authorization data has been authenticated and verified, the funds are sent to the acquiring bank and subsequently to the merchant’s account.

Even minor errors in any of these stages might result in an online payment failure.


Entities involved in payment authority or online payment processing include payment processors, payment gateways, issuer banks, acquiring banks, and so on. These entities have their downtime, which might be planned or unplanned.

If any of the entities mentioned above are unavailable, the server cannot contact them and hence cannot get transaction clearance. This might result in failed online payments.

Incorrect Information

Often, the cause for an e-commerce payment authorization failure is as simple as entering erroneous data, which prevents the transaction from being allowed. This happens most often when we’re in a rush and aren’t paying close attention to our entering information.

The Following are Instances of Transactions Being Rejected When Incorrect Data is Entered:

  • If your card does not have the appropriate balance, or if you input an incorrect CVV number or expiration date, you will get a notice that says ‘not captured.’
  • It is also possible that the OTP is not delivered to your message inbox, and the transaction timer expires. You can also click the ‘resend OTP’ option in this instance.
  • If you input the incorrect password or OTP, you will receive an error notice saying that your transaction was unable to be authorized. You can retry by selecting the ‘resend OTP’ option.


Identifying online payment fraud is a constant battle that almost every organization involved in online payment processing is battling. Every bank, including issuing banks, has active and fraud analysis tools and advanced fraud detection technology.

Depending on spending patterns, these technologies analyze and verify if the next transaction is authenticated or not. If the pattern does not agree, these tools can halt and refuse the transactions.

These are several red flags that lead the transaction to be rejected in this situation.

  • The Bank Identification Number (BIN) is shown on the card. There is a listing of BIN numbers that have been blocked. If the transaction is started with a blocked BIN, it may be denied.
  • Many businesses have a transaction limit, and the payment gateway may reject any transaction that exceeds the limit.
  • A security risk posed by an issuing bank.

Here are a Few Other Common Causes of Online Payment Failure:

  • A transaction with a credit card that has been maxed out.
  • Incorrect billing address.
  • If the account used to initiate the transaction is suspended or closed.
  • If the bank has flagged the customer’s account.
  • The payment gateway does not support the customer’s preferred online payment option.
  • The debit/credit card was cancelled.
  • The credit/debit card has expired.
  • The merchant account has stopped the transaction.
  • Payment gateway mis-configuration.

Here are Typical Error Messages that Consumers See after a Payment Fails:

  • The payment was not captured owing to an insufficient account balance or an invalid CVV.
  • When the third signature is incorrect, signature validation fails.
  • The transaction cannot be authorized because Invalid Password or OTP.

Failures with online payments are not preventable. Understanding the causes might help you make payments more efficiently and deal with consumer online payment failure complaints.

Why are Payment Failures Challenging to Quantify?

Lack of transparency is one of the causes many merchants are unaware of the payment authorization failures problem. Banking systems and payment are opaque, and businesses have no way of knowing why a particular purchase was denied.

Where are Failures Most Likely to Occur?

Payment authorization errors are more prevalent in high-priced transactions because customers are more likely to exceed their credit limits and issuers are concerned about fraud. That is why younger consumers are refused more frequently because it is simpler for them to exceed their spending limit when they have a lower threshold. Orders placed using international payment methods might also make issuers nervous. As a result, tourists are frequently targeted for payment authorization failures because buying from a different geographic location appears hazardous.

How Traders May Retaliate

The payment authorization procedure is inefficient and opaque. However, we have discovered that most merchants are not adopting best practices to alleviate the problem. Even though merchants cannot control an issuing bank’s payment decline regulations, they can provide shoppers with the opportunity to overcome the decline once the bank has disallowed the transaction. Issuing banks and payment gateways will offer payment reject codes when a transaction fails authorization, but the codes are too ambiguous to be helpful. It is discovered that around 70% of the time, the decline code supplied by the declining company is general and does not offer a rationale for the decision. Because of this lack of transparency, it is exceedingly difficult for businesses to determine the scale of their payment refusal problem – precisely, how many of their eCommerce purchases are refused unnecessarily.

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